Diwali marks the beginning of the Hindu year, Samvat. Trading in stocks and commodities during this period is believed to be auspicious for investors. While equity markets had a historical run in Samvat 2076, this year is all about survival and security. If you are a retail investor having Rs 1 crore to invest, here are a few recommendations for investing and dividing your portfolio exposure across sectors, which are expected to perform in the short-term (one year) to long-term (5 years).
Consumer Durables: As we head into quarter three and four, a recovery in demand is expected in the consumer durable goods segment, with an upward trajectory in appliances on the backdrop of robust feedback from trade, rising consumer confidence, improved loan rates and productive environment. Exposing your portfolio to stocks like Whirlpool, Havells India, TTK Prestige at 30 percent of the total investable amount is recommended.
FMCG: With upward sales and better traction in the rural economy, segments like food, personal care, etc continue to sustain and do well. Investors should take exposure to Britannia, Marico, Hindustan Unilever and keep the same at 30 percent of the investable amount.
Pharmaceutical: New product launches, the announcement of a new life-saving vaccine, increased focus on healthcare spending and provisions, all bodes well for the sector. Investors can accumulate stocks like Pfizer India, Abbott India, GSK Pharma, Sanofi, AstraZeneca and keep the exposure at 20 percent.
Automation/ Infrastructure: The need for better virtualisation/project management, digitalisation of infrastructure, automation of processes has picked up in the last few months due to the shift to suit the growing volume of industrial projects, work from home employees. It would be advisable to invest in Honeywell Automation, 3M India with an exposure of 20 percent.
If you are a High Net Individual (HNI) have Rs 5 crore to invest, here are a few recommendations for investing and dividing your portfolio exposure across these sectors, which are expected to perform in the short term (one year) to long term (5 years).
‘Out of Home’ versus 'Work from Home' portfolio (Consumption Recovery Sector): This could be a hidden bag which has the potential to deliver huge valuation upside. As the consumption shows signs of recovery over the next year, sectors like travel, hospitality, FMCG, media & entertainment purchases will witness huge pent up demand. Customers are keen on accepting more out of home experiences leading to a return to normalcy with confidence revival on the back of the newly announced vaccine. We can expect the above segments to outperform. Investors can look at industry leaders Indian Hotels, IndiGo, PVR, United Breweries, Jubilant Foodworks and keep the exposure at 30 percent of the investable amount.
Textiles: Demand for home textiles will witness a robust recovery with export markets continuing to benefit players both in the branded and unbranded industrial textile segment. The textile sectors is one of the key sectors where CAPEX and manufacturing will come in and most of the companies will showcase an uptrend of increasing margins. Investors should look at Century Textiles and keep exposure at 20 percent.
Food Processing: The consumption of meat, poultry, fish and dairy products are subdued right now and the volume consumption is expected to pick up in the coming months. Even the business of Palm Oil is showing signs of revival. Investors can also target a good player in the modern retail consumption segment. Investors can accumulate Godrej Agrovet and keep exposure at 20 percent.
Chemicals: Crop protection, insecticides, industrial chemical applications are undergoing a robust recovery and many of the large players are cash flow rich companies which are able to increase capex and meet existing demand. Agriculture as a sector has shown absolute resilience and augurs well for these companies. For eg: Look at Bayer Cropscience, BASF and keep your exposure at 15 percent.
Paints/ Industrials: Companies manufacturing paints and industrial applications have shown consistent demand despite the volatility of the crude price that they have weathered and provided consistent margins. New products, industrial applications, research developments are some of the key drivers that will keep the cash flow and valuations at par. Investors should look at accumulating Akzo Nobel and keep exposure at 15 percent.
These are a few recommendations that can help build your diversified and secure portfolio in Samvat 2077.
(Nitin Shakdher, a professional institutional investor as well as Founder & CEO at the Green Capital Single Family Office.)Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.